Typically, as a company grows in size, its Procurement department evolves accordingly. What starts out as a group of two or three
buyers or category managers (let’s call this the Purchasing department) grows
into a more established Strategic Sourcing department that executes RFXs,
conducts spend analysis, and reviews and refreshes contracts. Over time, as the company continues to grow,
Supplier Relationship Management (SRM) is added to the mix and a Chief
Purchasing Officer (CPO) may be brought on board to oversee and guide the
company’s procurement operations.

In smaller companies, a natural collaboration usually
develops between the people in purchasing and the people who are directly
affected by purchasing decisions (i.e., the end business users). But sometimes,
especially in situations where companies experience drastic growth and are
forced to rapidly increase the size and scope of their procurement departments,
procurement loses sight of the importance of this collaborative relationship.
In the chase for the highest possible cost savings, individuals can lose focus
of the bigger picture, which may lead to strained relationships with incumbent
suppliers and extra work in the future. Below are some of the main benefits of maintaining
a collaborative relationship between business stakeholders and the procurement
department:

More
effective sourcing events. It is important to understand why you are going
to market for a certain category, and the best people to help you understand this
reason are the people that work within that category daily. Are they unhappy
with the capabilities or service levels of the current supplier(s)? Or are they
simply looking to reduce costs while maintaining the exact service levels that
they are currently receiving? Knowing the answers to these questions will allow
you to tailor your RFXs and lists of invited suppliers to maximize the
efficiency of the RFX process.

A faster
and easier implementation process. When business stakeholders are involved
in the planning of sourcing events and in evaluating supplier responses, they
will be more motivated to see the sourcing events through to fruition. When
stakeholders are involved in creating supplier questionnaires they will be more
interested in evaluating supplier responses and when they are involved in the selection
of participating suppliers, they will be more interested in seeing how each
individual supplier responded. And if they dedicate their time to all of these
steps throughout the procurement process, they will be more motivated to ensure
that the rest of their team works with the selected suppliers.

Enhanced
compliance levels. As stated in the above point, when there is stakeholder
buy-in throughout the sourcing and implementation processes, there is a much
greater chance of internal compliance to working with the new preferred
supplier base. When business team members are involved throughout the whole
process and are aware of exactly what suppliers are involved and why certain suppliers
are eventually chosen, they will be more willing to buy-in than if they are
just handed a list of new suppliers one day and told to work with them.

Most of this likely seems like common sense, but it is the
kind of thing that people often forget to think about when procurement departments
grow rapidly and team members are asked to take on new responsibilities that
they may not have had exposure to previously. Keeping in mind the importance of
collaboration between procurement people and business stakeholders can go a
long towards achieving effective and efficient sourcing events within your
company.

Strategic Sourceror

StrategicSourceror.com is a leading industry blog that focuses on providing news, tips, and best practices for a variety of procurement, supply chain, and strategic sourcing categories.

This site is owned and operated by Source One Management Services, LLC; the leading consultancy providing strategic sourcing resources, procurement advisory consulting and procurement support services to hundreds of companies.

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About Source One

Source One Management Services, LLC is a leading procurement services provider. Since 1992, Source One has been providing companies in all industries with sourcing services including BPO, Benchmarking, Spend Analysis, Category Support, and RFX Management.